There's no shortage of headlines from Citigroup (C: sentiment, chart, options) this morning. The blue-chip bank announced that it's dramatically slashing its mortgage business, and reports suggest that Citigroup may also be seeking partners to assist with its planned takeover of Wachovia Corporation (WB). A tentative truce between Citigroup and its rival bidder, Wells Fargo & Co. (WFC), is set to expire at noon today -- right ahead of a federal court hearing on the matter.

According to The Wall Street Journal, Citigroup and Wells Fargo may end up dividing Wachovia's deposits between them by region, with Wells grabbing between 75% to 80% of the existing deposits. However, Citigroup is now reportedly reaching out to other potential partners in an attempt to win a larger share of WB's deposits. The Journal, citing people familiar with the matter, said that Citi has reached out to some non-bank corporations in an attempt to form a powerful alliance capable of trumping Wells Fargo's bid.

As for today's mortgage news, Citigroup said it will cut 500 mortgage-related jobs, primarily in the sales and support departments. The cuts represent approximately 5% of C's nationwide mortgage staff. Additionally, the bank slashed the number of independent mortgage brokers it works with from 9,500 to 1,000, a 90% reduction.

At midday, C shares are down more than 2% to trade below $15. The 2 most active options on Citigroup are the October 20 call, which has traded volume of 10,495 on open interest of 109,609, and the October 15 put, which has seen 10,181 contracts change hands on open interest of 78,325.